China wealth fund eyes Asia as Western protectionism rises

SummaryCanada has twice delayed a decision over whether to allow a $15.1 billion bid by CNOOC Ltd.

China's sovereign wealth fund will focus more of its $482 billion firepower on Asia in twin bids to beat a rise in protectionism in the West and boost exposure to rapid regional growth, chairman and chief executive Lou Jiwei said.

The man charged with stewardship of a slice of the world's largest store of foreign wealth lauded the British approach to overseas investment in public sector projects as one for the world to follow and said the policy response to Europe's debt crisis was a reason to stay underweight bonds and stocks there.

There is a rise in protectionism in both trade and investment in some Western countries, the China Investment Corporation chief, speaking on the sidelines of the Communist Party congress to choose a new leadership line-up said.

As compared to other financial investors we feel that the scrutiny on us is a little more strict, because of issues like national security, Lou said, adding that while not a major issue yet, he detected rising concern among foreign regulators when CIC partnered with Chinese firms to make acquisitions.

Tensions between Beijing and Washington have recently ratcheted higher thanks to a series of trade actions against China by President Barack Obama, including his blocking of a privately owned Chinese company from building wind turbines close to a US military site, and his challenge of Chinese auto and auto-parts subsidies in a World Trade Organization case.

The US House of Representatives' Intelligence Committee warned last month that Beijing could use equipment made by Huawei, the world's second-largest maker of routers and other telecom gear, as well as rival Chinese manufacturer ZTE, the fifth largest, for spying.

Canada has twice delayed a decision over whether to allow a $15.1 billion bid by CNOOC Ltd, China's top offshore oil and gas producer, for Nexen Inc, despite shareholders giving it their backing.

Having tackled some concerns about acquisitions by sovereign wealth funds, such as CIC, in 2008 through the adoption of guidelines brokered by the International Monetary Fund, known as the Santiago Principles, governments worldwide now bristle at the rising number of investment bids for strategic assets made by state-backed firms that fall outside that framework.

Lou said CIC would not change its strategy of partnering with Chinese firms simply to assuage concerns of foreign regulators - particularly if such a partnership presented the best-value proposition to the fund, which is mandated to boost returns on a substantial